Boulder staff seeks $15,000 blight study at Diagonal Plaza

Move could pave way for use of eminent domain

City staffers will ask the Boulder County Council tonight to approve a $15,000 blight study of the aging Diagonal Plaza Shopping Center at 28th Street and Iris Avenue.
(
PAUL AIKEN
)

If you go

What: Boulder City Council meeting

When: 8 p.m. Tuesday, following the City Council study session

Where: Boulder Municipal Building, 1777 Broadway

Urban renewal explained

An urban renewal project is defined by state law as "undertaking activities for the elimination and for the prevention of the development or spread of slums and blight, and may involve slum clearance and redevelopment, or rehabilitation, or conservation or any combination or part thereof in accordance with and urban renewal plan." An urban authority may only proceed with an urban renewal plan, and designate an urban renewal area, if the area in question is determined to be blighted.

A blighted area is a legal finding that an area meets certain criteria that gives a municipality the authority to condemn property using eminent domain. There are 11 factors of blight identified in the law, and four of them must be found for an area to be declared an urban renewal area. If eminent domain is used, five factors of blight must be found.

Boulder staffers plan to ask the City Council on Tuesday for permission to move ahead with a $15,000 blight study at the aging Diagonal Plaza Shopping Center.

The study could open the door for the city to develop an urban renewal plan for the 657,000 square feet of building space, and the potential to use eminent domain to force the sale of the properties.

Boulder leaders have been discussing potential ways to help redevelop the aging shopping center at 28th Street and Iris Avenue since last fall. Complicating any redevelopment, however, is the high cost of the land -- up to an estimated $45 million -- and a hodgepodge of 15 property owners.

The Diagonal Plaza -- which was built in 1965 and modified in 1995 with an addition facing 30th Street -- has had high vacancy rates the past couple of years, shown signs of disrepair and contributed declining sales taxes, city officials say. It is home to the Department of Motor Vehicles, Sports Authority, 24 Hour Fitness and several small businesses.

The city in January hosted an Urban Land Institute technical advisory panel, which looked into the possible future uses of the site. The group of Realtors, land planners and other development experts concluded that there is "no clear, compelling reason for dramatic action or investment by the city for Diagonal Plaza," in part because there is not a developer or major retailer interested in the site.

The panel recommended that the city instead take an "incremental approach" to Diagonal Plaza, such as stricter code enforcement, to prevent further deterioration of the shopping center.

But Liz Hanson, Boulder's economic vitality coordinator, said circumstances have changed in the last few months.

"We have had continuing inquires from potential developers," she said. "There are lots of ideas out there."

A representative from King Soopers, she said, has expressed a particular interest in the property.

Hanson said she's now recommending a blight study to better understand all of the city's options.

The study, which would cost an estimated $15,000, would determine whether Diagonal Plaza meets the state's definition of a blighted area. There are 11 criteria used to determine blight, such as deteriorating structures, inadequate street layouts, unsafe conditions or environmental contamination.

At least four of the criteria must be met to declare an urban renewal area. If the city wants to use eminent domain to force the sale of the properties, at least five factors of blight must be found.

In its report to the city, the Urban Land Institute panel specifically cited the political implications of pursuing a blight study.

"Blight studies and urban renewal actions that are not initiated by property owners or with their support, are by their nature, politically controversial," the group wrote. "...The panel believes that it would be unwise for public officials to mention the prospect of condemnation until the city and the Urban Renewal Authority have a definitive plan (if not the actual money in the bank) to acquire the necessary property."

In relation to possible affordable-housing projects at the site, the panel wrote in its report that officials "should not even mention the word 'condemnation' in public discussions of the potential improvements."

Hanson said it's far too soon to know whether the city would even consider condemning properties if they are determined to be blight.

"There's certainly been no decision to use condemnation," she said, noting that property owners at the shopping center have been generally supportive of a redevelopment plan.

Boulder has only used an urban renewal authority twice: to develop the St. Julien Hotel in the mid-1990s and the Crossroads Mall in the early 1980s. Eminent domain was used to develop the mall.

John Schwartz, a Boulder resident who owns two buildings at Diagonal Plaza, 3300 and 3280 28th St., said there are still bitter feelings among some property owners about how the city acquired some of the Crossroads Mall property.

"I don't think there's a landlord in town who likes the idea of eminent domain," he said.

Schwartz said he understands the city's desire to redevelop Diagonal Plaza, but he isn't sure there's a clear-cut path to do that.

"I think everyone knows Diagonal Plaza isn't doing that well," he said. "We appreciate the fact that the city is interested in the area, which I think is positive. (But) even the city's studies themselves have not exactly given a road map."

He added that he hasn't decided whether he wants to be part of any redevelopment plan, as one of his buildings is filled with tenants that include CorePower Yoga and Edward Jones investments.

Larry Burnett, who owns the mini-mall at the center of Diagonal Plaza, did not return calls seeking comment on Monday.

If the City Council approves the staff request for a blight study, staffers also plan to continue communicating with property owners, gathering data and working with potentially interested developers.

Part of that work would include reaching out to the handful of out-of-state property owners who have never responded to the city's letters.

Boulder is pretty good at producing rock bands, and by "rock," we mean the in-your-face, guitar-heavy, leather-clad variety — you know, the good kind. For a prime example, look no farther than BANDITS. Full Story